(Repeat for additional subscribers)
April 8 (The following statement was released by the rating agency)
Fitch Ratings has assigned Sberbank (Switzerland) AG (SBS) a Long-term Issuer Default Rating
(IDR) of 'BBB' with a Negative Outlook. A full list of rating actions is at the end of this
rating action commentary.
KEY RATING DRIVERS
SBS's Long-term IDR is aligned with that of its parent, Sberbank of Russia
(SBRF; BBB/Negative/bbb), reflecting Fitch's view of the high probability that
SBS would be supported by SBRF in case of need.
SBRF's Long-term IDRs are driven by the bank's standalone strength, reflected in
its 'bbb' Viability Rating (VR), and are also underpinned by potential support
from the Russian Federation (BBB/Negative). The Negative Outlook on SBRF's
ratings mirrors that on the sovereign and reflects both a potential weakening of
support and the potential for the VR, which is at the same level as the
sovereign, to be downgraded due to risk of a weakening operating environment, as
SBRF is exposed to the broader Russian economy.
Fitch's view on the probability of support for SBS is based on (i) SBS acting as
an integral part of the group's servicing of its core clients, in particular
commodity exporters, by providing trade finance services and participating in
structured lending as well as client settlements; (ii) the track record,
although still short, of support since acquisition, including equity and
subordinated debt injected in 2013-1Q14; and (iii) high reputational risks for
SBRF from any potential default of SBS given the parent's presence on
international markets. The agency's view also takes into account SBS's small
size (significantly less than 1% of the group's consolidated assets at
end-2013), which limits the cost of any potential support, as well as common
branding and the high level of operational integration between the entities.
Fitch has not assigned SBS a VR because of its significant reliance on the
parent in terms of the business origination, strategic decision making and
funding. SBS's main business at end-2013 was highly concentrated structured
lending to some of the group's core customers. The loan book (equal to 62% of
assets or about 1x equity) comprised fewer than ten exposures. SBS's
participation allows deals to be structured under English or Swiss law. In 2014,
SBS plans to also engage in commodity trade finance, which it anticipates should
account for the bulk of the bank's revenue. In the longer term, the bank could
also become a platform for the international global markets operations of the
group. SBS is at present primarily equity-funded. Placements of group customers
accounted for 91% of liabilities at end-2013.
The Long-term IDR would likely change in tandem with the parent's Long-term IDR,
and hence could be downgraded in case of a downgrade of SBRF. Downward pressure
on SBS's ratings could also arise if there was a prolonged delay in the
provision of necessary support, or if, in Fitch's view, the parent's propensity
to provide support had weakened significantly. However, Fitch currently views
such scenarios as unlikely.
The rating actions are as follows:
Long-term IDR assigned at 'BBB'; Outlook Negative
Short-term IDR assigned at 'F3'
Support Rating assigned at '2'